The chances of Congress taking up comprehensive tax reform during an election year are anywhere between zero and none. Despite those odds, Rep. Kevin Brady (R-Texas), Chairman of the U.S. House Committee on Ways and Means, is pressing ahead with his efforts to debate various tax reform proposals. The Ways and Means Tax Policy Subcommittee has held two hearings so far in 2016, during which Members of Congress presented their own bills to reform the federal tax code.
For example, during last week’s hearing, Rep. Bob Goodlatte (R-Va.) discussed his bill – The Tax Code Termination Act (H.R. 27) – that would set a termination date for the current federal tax code in order to compel Congress to develop and approve a simpler tax system. The prospects for this bill, as well as the other bills presented during the hearings, remain uncertain. But it appears offering Members the opportunity to discuss different reform ideas seems to be a key component of Chairman Brady’s plan to find a path forward on tax reform. In fact, he recently announced his goal of producing a blueprint for tax reform by June. According to the announcement, the blueprint would be pro-growth and would take a range of tax ideas, including consumption tax and a reformed income tax, into consideration.
Whether or not draft legislative language is rolled out this year, the bigger question for counties remains how tax reform efforts will impact the tax exemption for municipal bond interest – the top federal tax priority for counties. Municipal bonds remain the bedrock of infrastructure investment at the state and local level. Previous proposals have sought to alter or outright eliminate the tax exemption, which would result in increased borrowing costs for state and local governments that continue to face budget constraints.
NACo, along with other local government associations, recently submitted a comment letter to the House Ways and Means Committee urging its members to preserve the tax exemption for municipal bond interest. Since comprehensive tax reform will be a multi-year process, NACo urges counties to continue explaining the importance of municipal bonds when they meet with members of their congressional delegations. Also, Reps. Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.) recently established the Congressional Municipal Finance Caucus that is focused on, among other things, preserving the tax exemption for municipal bond interest. NACo asks counties to urge their Representatives to join the caucus.
- 2016 Comment Letter to Ways and Means
Contact: Mike Belarmino at email@example.com or 202.942.4254